BostInno
Guide: 12 Boston Startups That Tackle the $1.3 Trillion Student Debt Problem
By: Katherine Igoe
Student debt is a huge and expensive problem in the U.S.: totalling $1.4 trillion and 44 million borrowers in 2017 alone. Even with new rules proposing to let student debtors discharge their loans in bankruptcy, support systems remain thin. One of fintech’s most popular and promising innovations—one that’s scooping up a big chunk of the $7 billion in fintech investing—is providing new ways to help users tackle their loans. But jury’s still out on how helpful these solutions will be or whether they’ll actually translate into practical assistance. Here are some of the most promising Boston startups tackling student debt.
Climb Credit
Climb partners with schools that have their students’ career and earning potential in mind, and then provide fixed-rate loans to their students at reasonable rates. The high-value vocational programs Climb Credit targets are often less expensive than a four-year degree and include focused, practical programs like coding as well as welding and trucking. Climb was named one of Business Insider’s hottest New York startups to watch in 2016; last March, COO Angela Garadi was a panelist on the MIT Fintech Conference.
CommonBond
CommonBond is one of the alternative lenders that stepped in when banks pulled back on lending to students in the late 2000s. Originally, they collected funds from individual investors to provide loans to graduate students. Then, it expanded after raising $100 million in a round of financing in 2013. CommonBond went national in 2015 and now lend and refinance loans at rates that they say are lower than even federal government loans, assessing undergrad and grad students on their future credit profile and cutting out the bank by lending directly. In 2017, they raised $300 million in debt to loan out and $30 million in a Series C equity round to continue developing its platform. They also acquired startup Gradible that provides a platform for employers to help employees pay down their debt.
Credible
Before students take out private student loans with high variable interest, Credible lets them compare personalized, real-time rates to find the best deal. Think of it like the health insurance marketplace, where students input some basic data points and get a side-by-side comparison of rates with clear options for repayment. Already have a loan? Credible will help students refinance to save money. Plus, the whole process is free. Credible’s already partnered with institutions like LendingTree, University of Maryland, and the Massachusetts Bar Association.
Dollarship
You might have seen apps that let you earn money by shopping. Dollarship lets students do something similar, but the results are applied to student loans. Over 200 brands have partnered with Dollarship, including Macy’s, Nike, Target, and Walgreens. When students buy from these retailers or complete “Homework Assignments,” they earn Dollarship Credits and enter weekly sweepstakes up to $25,000. They can also fund a 529 plan or buy school essentials with the credit.
Edmit
Edmit acts as a broker on behalf of students and their families during the college admissions process. Their data-driven advising takes into account a student’s academic profile and how much support (merit or non-merit) a potential school will provide them, giving families a sense of the total cost of a university. Edmit even connects the student with decision-makers and helps them request more financial aid when possible. Nick Ducoff, founder and CEO of Edmit is former vice president for new ventures at Northeastern University, so he understands the admissions perspective. Edmit closed an $855,000 pre-seed round in late 2017.
Frank
Frank is designed as a one-stop shop to make college finance as easy and streamlined as possible. Their platform helps make the Free Application for Federal Student Aid (FAFSA) easier, like TurboTax helps with tax forms. They also have a searchable list of colleges with real costs. They also offer student discounts for services like Hulu, access to financial aid advisors, and cards with $500 of financial aid that students can use while they’re waiting to receive their official aid. In early 2018 Frank secured $10 million during a series A funding round.
FutureFuel
MIT grad Laurel Taylor created FutureFuel in Boston to tackle two problems: the need for students to pay off debt and the need for employers to hire qualified STEM talent (which currently has a huge shortage). Each employer listed on the SaaS platform provides compensation in the form of student debt repayment in addition to a regular salary. Taylor calls the platform “a career fair that’s open 24/7.” In 2017, FutureFuel was one of BostInno’s 14 Boston Fintech Startups to Watch, and in 2018, it was a winner of the SXSW Accelerator Pitch Event.
Gradifi
With Gradifi, employers can help employees pay down their student debt. The program operates like a 401k except the money goes towards current debt instead of future spending. Gradifi also offers a CSU Plan (College SaveUp) that lets employers make direct contributions towards employees’ 529 college savings plans. According to their website, using Gradifi helps students pay off their debt three years earlier than they would otherwise. The program has big clients including PWC and Peloton. Gradifi launched in 2015 and was acquired by First Republic Bank, one of its first clients, in 2016; thankfully, its location has remained in Boston.
LearnLux
High school and college students don’t necessarily have the financial literacy skills to make the decisions that will determine the next decade of their lives. LearnLux fills that gap. They teach the basics of major financial challenges, from retirement planning to investing, credit, and more, to empower millennials to take control of their finances. The free program provides lessons that update constantly, and they take recommendations from users about what new content would be helpful. LearnLux won the PerfectPitch competition at the 2018 SXSW film festival.
LendEDU
LendEDU is a free marketplace for private student loans and refinancing. Their transparent pricing aims to help educate students without damaging their credit score. There’s one form to apply for refinance so students can compare their rates and terms. LendEDU’s edge is its scope: it works with major lenders including Citizens Bank and LendKey, as well as Social Finance (SoFi). LendEDU also helps with personal loans, and SoFi has an entrepreneur program that provides seed funding for entrepreneurs even with student debt.
Payoff
If qualified students have high credit card debt they’re struggling with, Payoff will give them an installment loan to pay it off. The interest rates are lower, and student’s FICO score will usually increase. In 2017, they partnered with Chicago-based Alliant Credit Union on their Payoff Loan Program. It’s the first arrangement between a credit union and financial services platform that gives borrowers a path to financial health, according to the release.
Scholarjet
What if students could earn scholarships that are based on action and advocacy, instead of solely just writing about their student profile? Founder Tuan Ho launched ScholarJet after his own experience writing application essays for scholarships. With Scholarjet, students earn action-based scholarships like designing a tool for someone with a disability or create a video to engage others about climate change. Winners usually earn anywhere from $1,000 to $3,000 to fund their education, plus they gain experience and material for professional portfolios. The company was a MassChallenge Boston finalist in 2017.
